The American Academy of Actuaries (AAA) and the Medicare Rights Center are two of the groups clashing over how the new Joint Select Committee on Deficit Reduction should handle Medicare.
Policymakers throughout the developed world are debating whether making good on employers’ and governments’ retirement benefits promises is possible, and, either way, how to pay for whatever benefits will actually be delivered.
In the United States, state and local governments are grappling with public employee pension obligations. The U.S. Postal Service is facing the prospect of insolvency because it cannot meet statutory retiree health benefits funding requirements.
Now the deficit reduction committee – the “Super Committee” – is discussing what the United States should do about Medicare.
The AAA, Washington, is urging the Super Committee to rein in Medicare spending – and overall health care spending.
“Our message to the members of the committee is that achieving long-term sustainability for Medicare will require slowing the growth in overall health spending, not simply shifting costs from one payer to another,” Cori Uccello, a senior health fellow at the AAA, says in a statement put out by the AAA.
Joe Baker, president of the Medicare Rights Center, Washington, is asking Super Committee members to remember that efforts to control costs by holding down Medicare spending could lead to devastating hardships for the old and the sick.
“We understand the pressure to focus on the numbers and the fiscal impact of your work, but through our work directly with Medicare beneficiaries, we see first-hand the struggles that this population and their caregivers, including their families and friends, face as their health care needs grow,” Baker writes in the Medicare Rights Center’s letter to Super Committee members.
Meanwhile, Federal Reserve Board Chairman Ben Bernanke warned in a speech in Minneapolis Friday that the country must make choices about retirement programs soon — or risk a possible loss of the ability to make choices.
“Without significant policy changes to address the increasing fiscal burdens that will be associated with the aging of the population and the ongoing rise in health-care costs, the finances of the federal government will spiral out of control in coming decades, risking severe economic and financial damage,” Bernanke warned.
President Obama created the Super Committee when he signed the Budget Control Act of 2011 into law Aug. 2. The act required the Democratic and Republican leaders in the House and Senate to each pick three members to serve on the Super Committee.
The Democrats on the committee are Sen. Max Baucus, D-Mont.; Sen. Pat Murray, D-Wash.; Sen. John Kerry, D-Mass.; Rep. Chris Van Hollen, D-Md.; Rep. Jim Clyburn, D-S.C.; and Rep. Xavier Becerra, D-Calif.
The Republican delegates are Sen. John Kyl, R-Ariz.; Sen. Rob Portman, R-Ohio; Sen. Pat Toomey, R-Pa.; Rep. David Camp, R-Mich.; Rep. Fred Upton, R-Mich.; and Rep. Jeb Hensarling, R-Texas.
The Super Committee members are supposed to develop a proposal for cutting the budget deficit by $1.5 trillion over 10 years by Nov. 23.
If the panel fails to come up with a $1.5 trillion package of cuts, and if Congress does not approve $1.2 trillion in budget cuts by Dec. 23, then officials in the Obama administration’s Office of Management and Budget (OMB) are supposed to apply “sequesters,” or spending cuts, with 50% of the cuts affecting defense programs, 2% affecting Medicare, and 48% affecting nondefense programs other than Medicare.
The Congressional Budget Office has estimated the federal government could spend about $46 trillion from 2012 to 2021, collect about $39 trillion in revenue, and accumulate about $7 trillion in additional debt. Medicare would cost $7.4 trillion over that 10-year period.
Other projections show that the main Medicare hospital insurance trust fund could run dry by 2024, and that Medicare expenditures could amount to 7.1% of U.S. gross domestic product (GDP) in 2040, up from 3.6% in 2010.
“Health care spending growth is threatening the sustainability of not only the Medicare program and the overall health system, but also the nation’s fiscal health,” Uccello says.
AAA members have argued that Congress could solve the program’s problems by taking steps such as changing the Medicare benefit plan design and changing the way the program pays doctors and hospitals.
The Medicare Rights Center has countered with descriptions of the individuals who could be affected by the Super Committee’s decisions.
The center quotes “Mr. E of Bozman, Maryland,” as writing, “Without Medicare my wife’s cancer would put us in the poor house. And, yes, I worked fifty years in two careers and contributed to Social Security since I was fourteen.”
Another consumer, “Ms. G,” writes, “I am a 71 year old single female who has Original Medicare and a Medigap policy. I am currently in treatment for an uncommon cancer that is not curable. To date, my treatment and physician costs have been covered by Medicare and I have been able to concentrate on dealing with my disease and situation.”
Baker says the Medicare Rights Center has concerns about proposed changes to Medicare and Medicaid that would reduce government spending by shifting costs to people with Medicare or proposals that would limit coverage for Medicare beneficiaries.
“Many of these proposals save money not only through the direct increase of costs borne by beneficiaries, but also through the subsequent drop in utilization that will occur because Medicare beneficiaries will not seek care that has become unaffordable,” Baker says.
Other Super Committee coverage from National Underwriter Life & Health:
- FSP Speaker: Prepare for Super Committee-Related Portfolio Adjustments
- Budget Battle: A Super Committee is Born
- Obama Administration: Super Committee Can Raise Taxes, Cut Entitlements
- Budget Bill Excludes “Tax Expenditure” Provisions
- Moody’s Places U.S. Aaa Government Bond Rating and Related Ratings on Review for Possible Downgrade